Thursday, August 18, 2005

Here We Are

In a nationwide survey of more than 2,000 adults published last fall, 55 percent of those surveyed said they were dissatisfied with the quality of health care, up from 44 percent in 2000; and 40 percent said the quality of care had gotten worse in the last five years.
italics mine

This survey, by researchers at Harvard, the federal Agency for Healthcare Research and Quality and the Kaiser Family Foundation, illuminates the sorry state of the "best healthcare system in the world".

For the first time since the implementation of medicare, over half of Americans are dissatisfied with their health care. It's a seething indictment-- telling us what the average patient already knows -- health care is no good, and it's only getting worse.

The survey is couched in this New York Times piece on the emotional degradation of patients. I won't speak to that, because it's an enormous subject I have strong opinions on, and besides the point of this post. I suggest you read it, but it's not the topic here.

Instead I want to explore some points from Jill Quadagno's recent book, One Nation Uninsured, that give context to the attitudes expressed in this poll. How the hell, with this country's many incarnations of health care delivery, did we get to 55% unfavorable? What's made Americans swallow one substandard form of care after another?

Quadagno's book explores innumerable events that led us down this thorny path. I just want to focus on two decisions from 1942-43. These key shifts in health care law and delivery are inextricable from our current system.

The first major event came in the form of the Revenue Act of 1942, enacted during WWII as a means of keeping corporations from profiteering. Under the law, excess profits (defined as higher than before the war) were taxed at 80- 90% (!). However, health care was counted as a tax-deductible expense, and many employers started hiding profits in generous trust funds for fringe benefits.

So what, exactly, does that mean? Basically the government indirectly encouraged employers to offer health insurance and fringe benefits as a way of avoiding penalization for excess profit. After the war, many corporations had this infrastructure in place, and continued to offer healthcare, enjoying the tax-deductible benefits.

Quadagno’s next revelation jumps on the back of the 1942 decision. It’s the story of how the labor movement kept the U.S. from a national health insurance program by demanding employers provide health insurance. And its effects reach much further, directly creating the situation today, where 45 million people are uninsured. It’s also led to the unrest cited in the poll above, as employers shift insurmountable insurance risk and cost to their employees.
Quadagno on page 50:
The second important ruling was a 1943 decision by the National War Labor Board that employer contributions to employee benefit plans would not be counted as wages. The trade unions had been unable to demand higher wages because they were bound by their no-strike pledge. The board’s decision gave them the opportunity to negotiate health and pension benefits in their collective bargaining agreements as a substitute for wage increases.

This ruling granted unions a new and influential bargaining tool, one that was immediately utilized for their betterment. Over 50% of strikes in 1949 and 70% of strikes in 1950 were over benefits. The ruling also served as a powerful incentive for new members. Employees were much more likely to join unions if they could receive health insurance.

Employers, in turn, were willing to provide benefit packages instead of higher wages because they were tax exempt. And with these (and other) changes, the number of people with health insurance increased from 6 million to 75 million between 1940 and 1966.

So there you are, the two main reasons we have employer based health insurance. Any plan that calls for change must consider these incentives. If rearrangements occur, like removing the tax deductible status of health care (which would certainly fix that budget deficit), expect employer-linked health insurance to dissolve. On the other hand, don’t expect big business to jump on the national health insurance wagon. Any changes that lessen the employer’s burden in the meantime will destroy chances for a nationalized plan. We desperately need the aid of employers in the face of such bitter enemies as the AHA, AMA, and Pharma.


At 8/21/2005 7:41 PM, Anonymous StealthBadger said...

I'm puzzled that the tax-deductible status of benefits hasn't protected them more from the deep erosion we've seen in health plans over the past fifteen years. Even as restrictive as they were, the peak time of HMOs (I'm thinking of BCBS' Capital Care) at least allowed for cheap, regular access to your "designated primary care physician," even if going to specialists was an unbelievable pain in the ass.

I suspect part of it has to do with the gradual shortening of the profit cycle, to where annual budgets are meaningless and quarterly statements are what hold the most interest when it's time to examine the almighty "shareholder value" of a corporation (which would be why pension plans, which are about as long-term an investment as you can get, have been categorically de-emphasized as a corporate benefit).

It's gotten to the point where the low end doesn't even pretend to be insurance anymore - the bottom of the barrel is the so-called "discount plan," where the holding company negotiates lower rates for its members based on the size of its subscriber base, but does no actual paying of anything itself; Healthcare Advantage is one.

When a few Bush voters are finally starting to say "I think maybe we made a mistake," healthcare involves an outward spiral of paying more for less, the Iraq war promises to provide yet another subject for the next three generations on which we'll be unable to even agree on a common set of givens for the discussion, and corporate and government power finish their unification behind a shroud of nationalist and religious rhetoric, it's hard to even get up in the morning.

Heh. Sorry, not so inspiring a week. It is good to see you writing again, however! ^^

At 12/17/2005 7:36 PM, Anonymous Blue Cross of California said...

Employers should always offer health insurance as it is a great benefit to many employees. Many workers are in the job for the benefits itself and without health coverage theres nothing to look forward to.


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